"While inflation is well controlled in 2014, it has much less salience for macro policy than in years past. Inflation is no longer the binding constraint on credit growth; instead, financial stability risk is," said Bill Adams, senior international economist for PNC Financial Services.

Wall Street shares sank overnight with both the Dow and S&P 500 down 0.7 percent while the Nasdaq fell by over 1 percent as investors braced for quarterly earnings.

Mainland stocks widened their losses to over 1 percent, falling to their lowest levels since June 27, while the yuan rose to a three-month high against the dollar as investors monitored the U.S.-China Strategic and Economic Dialogue in Beijing.

Japanese shares finished at a more than one-week low on the back of a stronger yen. The currency rose against the dollar for the third session to hit a one-week high of 101.42, adding pressure on currency-sensitive exporters.